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Exam 12: The Legality of Agreements

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Question 31

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Doug agrees with Elin to sell prescription drugs illegally to Elin's friends for 25 percent of the take. Doug sells the drugs but keeps all of the money. Elin can

A) recover her share of the money.
B) not enforce the deal.
C) recover the total amount of the sales.
D) recover her costs but none of the illegal profit.

E) B) and C)
F) A) and D)

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Question 32

Multiple Choice

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A contract to do something that is prohibited by federal or state statute is

A) enforceable if the parties are aware of the prohibition.
B) enforceable if the parties are ignorant of the prohibition.
C) enforceable if the contract does not negatively affect society.
D) unenforceable.

E) A) and D)
F) None of the above

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Question 33

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If an illegal contract is executory, either party can enforce it.

Lazlo and Mac bet illegally on the outcome of a sporting event. Before the event is held, Lazlo changes his mind about the wager. Lazlo can

If a state permits certain types of gambling, then it almost always permits gambling contracts as well.

Oscar owns Payroll Company, a bookkeeping service. Oscar pays Remy $5,000 to steal a list of a competitor's clients. This deal is

Adam agrees in writing to pay Bob to damage Adam's car, which is fully insured. Bob damages the car, but Adam's insurer refuses to pay for the damage. In Adam and Bob's suit against each other for breach of contract, the court is most likely to

Ohio charges Pablo, an architect, a fee to practice his profession in the state. This is

Licenses provide a means of regulating and taxing certain businesses.

At Mattress Store, Nate signs a contract to buy bedroom furniture. Nate finds the language of the contract difficult to understand. This is a factor in determining

A contract to do something that is prohibited by state statutory law is illegal but not void from the outset.

Jim is an emergency medical technician (EMT) . EMTs are prohibited by statute from working more than a certain number of consecutive hours. One month, Jim works more than the legal limit. He can get paid for

Gold Mines Inc. sells stock in a nonexistent gold mine to Harry in violation of a blue-sky law. Harry can sue the seller to recover

Best Products, Inc., hires Cole to develop and implement an e-commerce strategy for marketing Best's products.  Cole signs a contract that includes a clause prohibiting him from competing with Best during and after the employment.  Before the strategy is implemented, Cole resigns from Best's employ and opens a business to compete with Best.  In Best's suit against Cole, to determine whether Cole may compete with Best, what is the most important factor the court should consider?

Any scheme that involves the distribution of property by chance among persons who have paid valuable consideration for the opportunity to receive the property is usury .

Jake and Kline make an illegal contract that unjustly enriches Jake at the expense of Kline. A court will

Statutes rarely set forth rules affecting the terms of contracts.

Exculpatory clauses are often held to be unenforceable.

Statutes may prohibit certain contracts based on their subject matter.

When the performance of a contract is rendered illegal by a statute, the contract remains enforceable for a reasonable time.